Minimum Wage Hike Coming At The Worst Time Possible

Ah, this question. The
minimum wage/employment question. It's always guaranteed to set
off a firestorm of dueling economic studies, showing either that
an increase has a terrible effect on unemployment (hitting
youngsters and African Americans particularly hard) or it has no
effect.

Econ prof David Neumark decided to wade into the muck with a
WSJ
op-ed today, nothing that in July the Federal Minimum Wage
will jump from $6.55 to $7.25, which he argues is particularly
unfortunate timing. Indeed, if you accept basic economic
orthodoxy, it doesn't make much sense to make labor more
expensive at the same time as companies are weighing job cuts.

Neumark cites a lot of studies warning of the likely ill effects
of the change and thinks that, if nothing else, the change should
be delayed.

Needless to say, that will never happen given the current
political climate.

No doubt, Neumark's supporters will cite the experience of the
Great Depression, when government price controls and minimum wage
hikes are thought to have contributed to widespread unemployment.
But bear in mind, that was a period when we had sustained
deflation. The price of everything but labor was falling. If the
Fed achieves its goal of inflating like crazy and staving off
what Ben Bernanke calls "it", the effects may not be quite so
pernicious.